The State Bank of Viet Nam (SBV) has pledged to continue regular inspections of commercial banks to ensure the safety of Viet Nam's financial system.—File Photo

HA NOI (Biz Hub)— The State Bank of Viet Nam (SBV) has pledged to continue regular inspections of commercial banks to ensure the safety of Viet Nam's financial system.

The pledge came after the SBV's Bank Supervisory Agency completed the first six months of inspections, designed to make the nation's banking sector healthier.

It is intended that close monitoring will identify banks that need restructuring and reduce the risk of a financial crisis.

The SBV confirmed that in the first six months, it had provided strict guidelines for voluntary mergers, consolidations, and acquisitions taking place to remedy unfit lenders.

So far eight restructuring plans have been submitted to the Prime Minister for nine commercial banks. Under the submission, three banks have merged and another three banks have received approval for self-restructuring plans.

The central bank is yet to impose any involuntary restructuring, with only one bank under consideration for compulsory intervention.

For the past two years, mergers have involved Saigon Commercial Bank (SCB), Viet Nam Tin Nghia Bank (TinNghiaBank) and First Commercial Bank (Ficombank).

The SBV last year also gave approval for a takeover of the Ha Noi Housing Commercial Joint Stock Bank (HBB) by the Saigon-Ha Noi Commercial Joint Stock Bank, merging over VND8.866 trillion (US$422.19 million) of capital.

PetroVietnam Finance Joint Stock Corp (PVFC) and Western Commercial Joint Stock Bank (WTB) are also seeking SBV approval for a completed merger to help boost earnings by the third quarter.

The SBV backed the measures, saying they were helping to create a more solvent banking sector.

Economist Bui Kien Thanh believes the measures are on par with international standards.

In a further measure, SBV last week officially launched the Viet Nam Asset Management Company (VAMC) to resolve bad debts.

Chairman of the Member Board of VAMC and SBV Deputy Governor Dang Thanh Binh said the number of debts handled by VAMC would depend on a range of factors, adding that he expected VAMC would help to build a public debt trading market. — VNS